To avoid economic disaster, Europe must demonstrate financial solidarity

Seven leading German economists call for €1 trillion of European crisis bonds.

Flags of European Union fly next to flags of EU countries at the European Parliament on July 2, 2019 in Strasbourg, eastern France, during the inaugural European Parliament session. - European Parliament opens a new session on July 2, 2019 with newly elected British MEPs still in their ranks and three Catalan separatists blocked by Madrid from taking their seats. (Photo by FREDERICK FLORIN / AFP) (Photo by FREDERICK FLORIN/AFP via Getty Images)

As the coronavirus sweeps Europe and societies go into lockdown, the economies of the Eurozone are now confronted with simultaneous supply and demand shocks. As people stay at home, factories are producing less and consumers are buying less.

Healthy companies with sound business models are suddenly finding themselves on the verge of bankruptcy due to acute liquidity problems. Without massive government support, unemployment will soar, consumer spending will collapse, firms will go under and the crisis will escalate.